A government shutdown and your real estate transaction

They say the economy of the United States lives and dies with housing.  So one might wonder how a government shutdown would effect the real estate industry.

Loan programs guaranteed, or administered by a branch of the federal government will clearly be hit the hardest.

 FHA loans, which have been lauded as the backbone of the housing recovery, won't be made during a shut down.  Use of these loans has been easing as the economy improves, and some of the more generous portions of the program have been trimmed back.  FHA loans still make up a significant portion of first time buyer loans.

Similarly,  Federal VA loans and USDA loan programs will grind to a halt.  As you might imagine, Federal VA loans are a GI benefit, and help provide housing for veterans.  USDA loans encourage home ownership in rural and small town communities. 

Even non-"government" loans will be affected.  There are several interactions loan processors have with the federal government merely to underwrite loans and complete home purchases;  tax return transcripts and social security number verification, to name a few.  These steps must be completed for many home loans to be funded.

Loans underwritten by Fannie Mae and Freddie Mac  may be able to fund, as long as they don't  need any information from the Internal Revenue Service or the Social Security Administration.

If you are in the middle of a home purchase or refinance, check with your lender to see how a government shut down might affect your transaction.

Certainly, a government shut down will have a broad reach into many parts or our lives, and well beyond real estate. This blog is a mere glimpse...